VEOLIA has agreed a deal to buy its rival Suez, ending a fraught takeover battle that merges the world’s two largest water and wastewater companies.
The French firms have agreed a price of €20.50 (US$24.50) per Suez share, valuing Suez’s equity at around €13bn. Veolia bought a 30% stake in Suez from Engie last year. During the subsequent takeover negotiations Suez maintained that the €18/share that Veolia had paid Engie for its stake undervalued the firm. A bitter takeover battle ensued as the pair traded accusations in public and fought through the courts.
They have now agreed to enter into definitive merger agreements by 14 May. Together they have annual revenues of around €37bn.
As part of the merger, the pair have agreed to separate out assets that could have caused competition issues and put them into an independent “new Suez”. These include the municipal water and solid waste activities of Suez in France including its water research centre CIRSEE and Suez Engineering Solutions business, and its water interests in Africa, Australia, Central Asia, China, Czech Republic, and India.
To gain leverage during the negotiations, which Veolia made hostile in February, Suez moved to shield its French water assets in a Dutch foundation beholden to its board. It also agreed to sell its recycling and recovery business in Australia to Cleanaway Waste Management. Suez will now cancel these moves.
Veolia CEO Antoine Frérot said the agreement “will enable the construction of the world champion of ecological transformation around Veolia, offering France a reference player in a sector that is probably the most important of this century.
“This agreement is beneficial for everyone: it guarantees the long-term future of Suez in France in a way that preserves competition, and it guarantees jobs. All stakeholders in both groups are therefore winners. The time for confrontation is over, the time for combination has begun”.
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